Investment on the rise, says chief economic minister

Rendi A. Witular, The Jakarta Post, Jakarta

Coordinating Minister of the Economy Dorodjatun Kuntjoro-Jakti insisted on Wednesday that foreign direct investment in Indonesia was on the rise, saying that the gloomy reports from the Investment Coordinating Board (BKPM) did not represent the real situation.

"If we use the proper statistics, we can see the real growth in investment," said Dorodjatun on the sidelines of the International Conference on Population and Development on Wednesday.

He explained that BKPM had failed to present a comprehensive picture of the FDI situation, because it focused primarily on licenses awarded to investors in select industries. It did not cover investment in the oil, gas, mining and real estate sectors.

Furthermore, the agency ignored several other indicators commonly used in other countries to measure foreign direct investment growth. The indicators include the consumption of fuel and electricity, the sales of commercial vehicles and motorcycles.

The sales of these commodities have been on the rise over the past several years.

Fuel consumption this year is expected to surge to 60.59 million kiloliters from 58.08 million in 2002 and 57.58 million in 2001, while electricity consumption, according to a report from Danareksa Research Institute, has been increasing by an average of 9.2 percent over the last five years.

Industry data shows sales of commercial vehicles, such as trucks and vans, increased by around 11 percent to 240,305 units in the first nine months of the year compared to the same period of last year. Motorcycle sales rose by 21 percent to 1.78 million units from 1.47 units in the first eight months of the year compared to the same period last year.

Dorodjatun said all these, which were ignored by the BKPM, indicated bullish economic activity in the country.

"Many funding organizations said that investment growth in Indonesia was higher than many had expected," said Dorodjatun.

BKPM's reports say that in 2002, FDI inflow into Indonesia contracted by US$1.52 billion, meaning that the value of foreign- owned businesses that relocated out of the country was $1.52 billion greater than the value of businesses entering the country. In 2001, the FDI inflow had contracted by $3.28 billion.

Dorodjatun also criticized several economists who recently painted a gloomy picture of the country's investment outlook, saying funding organizations and stock market players have a different perception.

"There are economists saying the country's economic prospects are gloomy. Well, they can say that, but, as a matter of fact, there are many players in the stock market who do not share their opinion," he said.

Dorodjatun was apparently referring to the economists grouped in the University of Indonesia's Research Institute for the Economy and Society, who recently gathered and declared that the country's economy would still be in great difficulty until 2008 with domestic consumption remaining the main driver of the economy.

They said foreign investment, essential to revive the economy, was still lacking due to various problems, including legal uncertainty, labor unrest and corruption.

Dorodjatun said it was too early to predict the economic conditions up until 2008.

"Frankly speaking, I am not bold enough to predict the state of the country's economy until 2008 because the inflow of investment is based on risk analysis which is hard to predict," he said.